It’s rather depressing how many partners want their management teams to obtain shrinkwrapped deals that will magically propel their firm to a new market position. The national practice wanting a London corporate jewel; the midsize firm hunting for the elusive fit that will keep everyone happy and entail the least amount of disruption. Partners averse to organisational change can find plenty of reasons to vote down a deal, something that has contributed to the slow pace of consolidation in the legal sector.
Let’s look at two developments last year: the Wragge Lawrence Graham (WLG) deal with Gowlings, and the merger between Irwin Mitchell (IM) and Thomas Eggar. First, WLG. There’s still considerable puzzlement in the market as to why a Canadian firm is attractive, but there’s a more interesting dynamic at play here.
WLG can finally claim it is international, sure, but more importantly it’s now having to think hard about its own choices in order to create an international offering. It’s plumped for four key sectors, all of which have a heavy IP component and map onto their combined clients: advanced manufacturing, energy, tech and life sciences. Real estate, not so much. London is a global market for real estate clients, but rare is the firm that has been able to internationalise and integrate that practice, as DLA Piper found out to its chagrin. This is going to have a major knock-on effect on WLG’s growth priorities. Going global entails making choices and sticking by them.
IM, meanwhile, has negotiated an even more puzzling merger with Thomas Eggar. It’s easier to see it as part of IM’s long reinvention into a business that will eventually be half PI and half commercial. What IM has not yet done, though – and it needs to, fast – is to communicate what’s in it for Thomas Eggar and get some brand momentum. What is the endgame for this combination? A grown-up business doesn’t just make decisions, it owns them.
Contrary to the fond imaginings of many partners, the art of the merger is no longer about the perfect combination that requires little business integration skill, but skilled assessment of capacity, culture and clients. With the professionalising of data, sales, marketing and strategy, management teams ought now to be in a position where they can be more creative about the deals they can go for. To the three Cs I should also add communication. WLG and IM have demonstrated the former; now they need to communicate what that vision is.
Mergers are uncomfortable as well as exciting. The transformative deal doesn’t exist. You just have to make it so.